When a large construction company wanted in on a $1-million project set aside for underutilized businesses, it agreed to take on the role of subcontractor. But, in that role, its recovery for work performed was limited to the narrow scope of the subcontract, even though the company claimed it performed more than three-quarters worth of the project work.

In 2010, the U.S. Army Corps of Engineers (Corps) sought bids to replace the Cumberland Bridge Street Bridge in Cumberland, Kentucky. The $1,029,394 contract was set aside for contractors eligible under the Historically Underutilized Business Zone Program (HUBZone).

The project caught the attention of London-based construction firm Kay & Kay Contracting, LLC (Kay & Kay)---not a HUBZone-eligible business. Kay & Kay approached Vanhook Enterprises, Inc. (Vanhook), a HUBZone-eligible contractor, and the two entered into a series of agreements. Vanhook agreed to apply for the HUBZone contract and split the price with Kay & Kay, which would perform on the project as a subcontractor. After securing the contract, Vanhook and Kay & Kay finalized a team agreement whereby Vanhook agreed to serve as the prime contractor for the HUBZone contract.

In January 2011, Vanhook and Kay & Kay entered into a subcontract that outlined Kay & Kay’s performance of and payment for two out of the 43 project items: (1) $37,500 for mobilization and (2) a $410,000 lump sum price for bridge construction---i.e., “[a]ll Materials, Labor, Equipment[,] and applicable taxes for the construction of the Bridge Street Bridge.” (Later the same year, the parties also executed another written agreement, expressly excluded from the subcontract, for $12,300 under which Vanhook agreed to ren[..]